Ashtead Share Discussion Threads

[fenners66] 13/12/2017 12:17

My thinking is that to achieve a buyback of £1bn its likely they will have to borrow to do it.

So on an enterprise value basis any borrowings will cut profits and therefore enterprise value, and divert as much of that to debt (perhaps) as to the increase for any remaining equity.

It also is supposed to be a signal that the board have run out of ideas of what to invest in , just when they add a separate reporting segment for Canada which is still tiny and obviously would benefit from more investment.

Let alone the signalled increase in new plant spend - note average life of plant has jumped up to 30 months !

Add that to the questionable motivation - and then you see director share sales immediately following the announcement and what do we get - the opposite effect.

Not surprised at all.

Games Workshop - share price has gone up about 500% this year and has exposure to the US$ just announced a 30p dividend

Their share price is up about 63p on the news .

So what if the board had lifted interim dividend by 30% instead of this buy back ?

I do not get what advice they were following - but for me it looks like they have tripped up for the first time in years!

[bracke] 13/12/2017 12:02

fenners

I note the buyback is to be £0.5 to 1 billion.

Using the larger figure which is approx 10% of market capitalisation such a buyback would take the share price to approx £22. This assumes all things being equal which they rarely are. Is your thinking similar?

[2flatpack] 13/12/2017 12:02

Thank's dcarn.
Thinking about the buy back.
I cannot understand why they have not used it.
In the last quarter the share price fell to the 200day sma on three occasions, why was it not used then, an ideal time to support the share price.
The only reasons I can think are a. they are using it as a threat to the shorter's or b. an excuse to hold onto the cash for other reasons.
Cheers

[bracke] 13/12/2017 11:49

Good day all

Unfortunately I was out all day yesterday so missed the excitement.

I refrained from blowing my own trumpet a couple of days ago but am inclined to give it a toot today. I refer to post 54707 and "If the share price is to regain the ML 2100 is likely" and it did. That was a level I was looking for to place a short so am a little narked that I missed it.

Even if the Directors had not cashed in sizeable amounts of shares the probability is that the share price would as a minimum have retraced. The share price now needs to regain 2000 as support, maybe the share buybacks will help achieve that by underpinning the share price at that level.

The FED decide on interest rate today.

[fenners66] 13/12/2017 11:20

davidcar
that sound like a good idea I will join you.
I am motivated (today) to attend my first ever AGM next time now !

[dcarn] 13/12/2017 11:09

2flatpack,

Yes i think they assigned £200M for the last buyback but only used about £48m.

[davidcar7] 13/12/2017 11:07

I do not understand the reasoning behind the announced buybacks. This is often done where the directors feel that the market is undervaluing the shares - yet AHT has multiplied tenfold sine 2011 from 200p to 2000p! As a long term holder I would much prefer to have the dividend increased significantly. The level of dividend payment is in my opinion too low -and although I do not like to complain as the results declared yesterday and in fact for years now are outstanding I intend to write to the Board to inform them of my view.

[2flatpack] 13/12/2017 11:05

If my failing memory is correct, there is cash left from the previous buy back ,so they could start the buy back today.
Onward and upward.
Cheers

[fenners66] 13/12/2017 10:01

mtsblogs - You are right significant sells yesterday - after the results presented - which of course included the news about buy backs.

So why was that news included?

I made it clear yesterday that I do not like the waste of cash on buybacks - at an ALL TIME HIGH !

But was it added in because they thought the market would receive it well?

Berkely has been buying back shares instead of paying pre announced dividend levels - but their share price has risen - maybe in a less liquid market.

Did our directors anticipate the announcement would do the same here?

Then they sell a huge volume of shares after the announcement...............

[mach100] 13/12/2017 08:53

Lots of selling in America for tax purposes although that is usually for Tech stocks in the main added to more uncertainly with Trump now having a 51-49 majority. A double tax bombshell in a fashion. While I would have liked to sell yesterday and buy back in lower down, I do believe that AHT are a bargain under £20 and will be adding while under this price.

[2flatpack] 13/12/2017 08:45

I did not see that one coming.
Maybe this is the reason for the buy back,forward planning.
Cheers

[slogsweep] 13/12/2017 08:09

yes is that reason for drop in share price or the fact that Trumps tax reforms are in doubt now his senate majority is cut in half to 2 following Republican defeat in Alabama

[mtsblogs] 13/12/2017 08:05

Three directors selling big yesterday...

[3rd eye] 13/12/2017 07:11

Records and upgrades follow Ashtead's results
By Graeme Evans | Tue, 12th December 2017 - 13:05

As much as Ashtead (AHT) boss Geoff Drabble tries to downplay the "Trump card", there's no denying that the US president has been a boon for shares in the equipment rental company. They rose as much as 5% Tuesday to a fresh record high and some believe they could go further still.

Up more than 70% since Donald Trump's election to the White House, the FTSE 100 (UKX) stock was given fresh impetus today after Drabble forecast better-than-expected annual results and made a surprise pledge of up to £1 billion in share buy-backs over the next 18 months.

Trading momentum remains strong, particularly in the United States where Ashtead generates nearly 90% of trade through its Sunbelt division. Rental-only revenue growth for Sunbelt was 18% in the quarter to October 31 as group revenue lifted 22% to £945 million and profits rose 24% to £298 million.

Ashtead's role in clean-up efforts following hurricanes Harvey, Irma and Maria helped the performance, but Drabble is keen to stress that the factors behind the US growth story are as much structural as they are cyclical or due to one-offs.

Recent excitement in the City about Ashtead stems from Trump's US tax reforms, which will mean a lower group tax rate of 23-25% as well as a one-off, non-cash tax credit of about £400 million relating to deferred tax liabilities.

While Ashtead cautioned that the full benefit may not be fully realised until 2019/20, analysts at Investec Securities have said that a 23% effective tax rate could increase its estimates of full-year 2019 earnings per share (EPS) by 17%.



On Trump's infrastructure spending plans, Drabble said earlier this year that this was little more than a long-term advantage for Ashtead.

Ashtead has a five-year plan to grow its North American business and is only 18 months into the journey. Sunbelt is now the second-largest US rental equipment business, with almost 650 outlets. In 2014, Sunbelt entered the Canadian market where it is gradually building a presence and network of stores.

In the UK, Ashtead's A-Plant business continues to perform well and delivered rental only revenues of £182 million in the quarter to October 31, up 20% on the prior year.

With shares up 28% since the US hurricanes hit, UBS analysts said the strong quarterly performance and US tax cut were mostly factored into the share price, although they said that today's significant share buy-back was unexpected.

Barclays moved its target price to 2,263p from 1,867p following today's update, even though Ashtead has been the strongest performer in the UK support services sector by some distance over the past three months.

[malcolmmm] 12/12/2017 20:44

AHT has usually done very well at this time of year, bought more today

[fenners66] 12/12/2017 19:06

Nice little earners for you guys then - Xmas sorted?

[r ball] 12/12/2017 18:43

Or maybe not.....

[r ball] 12/12/2017 17:04

oh well. sold out at 8.10am this morning having bought in on Friday. now for the read across to Ferguson....

[lairddavid] 12/12/2017 16:31

Closed my short for about 45 points.Missed the gap fill this morning.

[3rd eye] 12/12/2017 16:29

Records and upgrades follow Ashtead's results
By Graeme Evans | Tue, 12th December 2017 - 13:05

As much as Ashtead (AHT) boss Geoff Drabble tries to downplay the "Trump card", there's no denying that the US president has been a boon for shares in the equipment rental company. They rose as much as 5% Tuesday to a fresh record high and some believe they could go further still.

Up more than 70% since Donald Trump's election to the White House, the FTSE 100 (UKX) stock was given fresh impetus today after Drabble forecast better-than-expected annual results and made a surprise pledge of up to £1 billion in share buy-backs over the next 18 months.

Trading momentum remains strong, particularly in the United States where Ashtead generates nearly 90% of trade through its Sunbelt division. Rental-only revenue growth for Sunbelt was 18% in the quarter to October 31 as group revenue lifted 22% to £945 million and profits rose 24% to £298 million.

Ashtead's role in clean-up efforts following hurricanes Harvey, Irma and Maria helped the performance, but Drabble is keen to stress that the factors behind the US growth story are as much structural as they are cyclical or due to one-offs.

Recent excitement in the City about Ashtead stems from Trump's US tax reforms, which will mean a lower group tax rate of 23-25% as well as a one-off, non-cash tax credit of about £400 million relating to deferred tax liabilities.

While Ashtead cautioned that the full benefit may not be fully realised until 2019/20, analysts at Investec Securities have said that a 23% effective tax rate could increase its estimates of full-year 2019 earnings per share (EPS) by 17%.



On Trump's infrastructure spending plans, Drabble said earlier this year that this was little more than a long-term advantage for Ashtead.

Ashtead has a five-year plan to grow its North American business and is only 18 months into the journey. Sunbelt is now the second-largest US rental equipment business, with almost 650 outlets. In 2014, Sunbelt entered the Canadian market where it is gradually building a presence and network of stores.

In the UK, Ashtead's A-Plant business continues to perform well and delivered rental only revenues of £182 million in the quarter to October 31, up 20% on the prior year.

With shares up 28% since the US hurricanes hit, UBS analysts said the strong quarterly performance and US tax cut were mostly factored into the share price, although they said that today's significant share buy-back was unexpected.

Barclays moved its target price to 2,263p from 1,867p following today's update, even though Ashtead has been the strongest performer in the UK support services sector by some distance over the past three months.

[james97] 12/12/2017 14:28

I think more like £35m as I think she was talking about the total effective tax rate on AHT rather than just Sunbelt. It is still massive and there would also be a one off a balance sheet effect of a £400m reduction in the deferred tax provision.

[fenners66] 12/12/2017 13:26

That would have saved £50m in the first half ?

[james97] 12/12/2017 12:37

The proposed rate is 20% but with certain restrictions on deductions for interest. Suzanne Wood estimated that overall AHT’s effective tax rate would be 24%